Panalpina increases group profitability

Panalpina logo at the company's headquarters in Basel, Switzerland. (Photo by Panalpina)

In the first nine months of 2018, international freight forwarding and logistics company Panalpina increased group profitability compared to the same period of last year. From January to September, gross profit increased from CHF 1,024.8 million to CHF 1,116.2 million.Year-on-year, Panalpina’s EBIT increased from CHF 72.1 million to CHF 83.2 million and the consolidated profit increased from CHF 48.4 million to CHF 51.0 million.

“In a year that so far has been characterized by strained international trade relations, we have increased profitability of the group compared to the first nine months of 2017,” says Panalpina CEO Stefan Karlen. “The macroeconomic uncertainties of the third quarter resulted in air and ocean freight markets that were not as strong as predicted. We saw a market where ocean freight peak season was weaker than anticipated. The air freight rates went up, which impacted our margins as expected. In all, we have stood our ground in a very volatile environment.”

Panalpina Group: Results for the first nine months of 2018

(CHF million)

YTD 2018

YTD 2017

Net forwarding revenue

4,442.5

4,065.5

Gross profit

1,116.2

1,024.8

EBITDA

208.5

103.9

EBIT

83.2

72.1

Consolidated profit

51.0

48.4

Increased profitability

Group gross profit increased 9% to CHF 1,116.2 million in the first nine months of 2018 (YTD 2017: CHF 1,024.8 million), while total operating expenses decreased from CHF 920.9 million to CHF 907.8 million. EBIT and consolidated profit increased year-on-year, EBIT reached CHF 83.2 million compared to CHF 72.1 million a year before and the EBIT-to-gross-profit margin stood at 7.5% up from 7.0%. The consolidated profit increased from CHF 48.4 million to CHF 51.0 million.

Air Freight

Panalpina’s Air Freight volumes increased 4% in the first nine months of 2018, in line with estimated market growth of 4%. Compared to the same period of last year, gross profit per ton increased 12% to CHF 705 (YTD 2017: CHF 632), resulting in a gross profit of CHF 530.1 million (YTD 2017: CHF 456.0 million). EBIT in Air Freight increased from CHF 69.4 million to CHF 80.2 million. The EBIT-to-gross-profit margin for the first nine months of 2018 came in at 15.1% compared to 15.2% a year before.

Ocean Freight

Panalpina’s Ocean Freight volumes from January to September 2018 decreased by 2% year-on-year, compared to an estimated market growth of approximately 3%. Gross profit per TEU increased 5% to CHF 296 (YTD 2017: CHF 283), resulting in a gross profit of CHF 331.9 million (YTD 2017: CHF 323.4 million). For the first nine months, Ocean Freight posted an EBIT loss of CHF 5.3 million, comparable with the loss of CHF 5.5 million in 2017. However, in the last two quarters, Ocean Freight was at break-even.

Logistics

In Logistics, gross profit increased 4% to CHF 254.2 million year-on-year (YTD 2017: CHF 245.4 million). Logistics posted an EBIT of CHF 8.3 million for the first nine months of 2018, compared to CHF 8.1 million for the same period last year.

Outlook

“Due to macroeconomic and political uncertainties, it is challenging to accurately predict the dynamics of the the air freight peak season and the impact on rates and volumes this year, but we have prepared meticulously, securing capacity for our customers and ensuring readiness on the ground at strategic airports. In ocean freight, we expect fairly strong flows into the USA, but otherwise moderate market growth globally and our focus remains on unit profitability improvement,” says Karlen. “The volatile freight forwarding environment is a constant reminder that we need to do everything in our control to continue to build an organization that is fit for sustainable, profitable growth.”

About Panalpina

The Panalpina Group is one of the world's leading providers of supply chain solutions. The company combines its core products – Air Freight, Ocean Freight, and Logistics and Manufacturing – to deliver globally integrated, tailor-made end-to-end solutions for twelve core industries. Drawing on in-depth industry know-how and customized IT systems, Panalpina manages the needs of its customers' supply chains, no matter how demanding they might be. Energy and Project Solutions is a specialized service for the energy and capital projects sector. The Panalpina Group operates a global network with some 500 offices in around 70 countries, and it works with partner companies in another 100 countries. Panalpina employs approximately 14,000 people worldwide who deliver a comprehensive service to the highest quality standards – wherever and whenever.

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Panalpina ended the year 2017 with strong Air Freight volumes and margins, while in the fourth quarter margin pressure continued to impact the financial results in Ocean Freight. For the full year, Panalpina’s reported EBIT increased from CHF 82.0 million to CHF 103.3 million and the reported consolidated profit increased from CHF 52.3 million to CHF 57.5 million.